SuperStream: Five things you should know
Monday, September 23, 2013/
The government’s superannuation reform has already had an impact on employers with increases in the superannuation guarantee rate increasing from 9% to 9.25% effective July 1, 2013 and continuing until 2019 when the rate has reached 12%.
This may sound straightforward, however, apart from complying with the legislative, an employer’s superannuation obligations also extend to any contractual obligations as per an employment contract.
Additionally, the upper age limit – previously capped at 70 – has been removed effective July 1, 2013 meaning that an employer is now required to make superannuation contributions for eligible employees aged over 70.
The government’s SuperStream measures also require employers comply with the new reporting standards. What this means is that, effective July 1, 2014, employers with 20 or more employees will be required to submit their contributions reports in a standard electronic format to each fund.
Unfortunately, the specification requirements are rather complex – it is not simply an Excel spreadsheet that you can format yourself – and as such, it is highly unlikely the employer will design the necessary format in-house so now would be a very good time for employers to discuss these reporting requirements with their software providers or superannuation clearing house.
Furthermore, effective July 1, 2014, employers will be required to remit their payments for superannuation contributions electronically, which means no more cheque payments. For those employers with 19 or fewer employees, these standards will become effective July 1, 2015.
Employers will also need to ensure that their default fund offers a MySuper product. MySuper is a cost-effective superannuation product introduced by the government in order to enable employees to compare funds more easily based on only a few key differences. The simplest way for an employer to ensure their default fund is compliant is to pick up the phone and call their fund or their account manager and ask whether the fund is MySuper compliant – and since this is a requirement effective January 1, 2014, employers would be wise to ensure compliance sooner rather than later.
Another measure the government had proposed was changes to the reporting of superannuation on payslips. One of the key factors in the government’s superannuation reform package was for individuals to keep a better track of their super and the idea was that this could be partly administered through changes in the reporting of superannuation on payslips.
Originally, the legislation was passed such that employers were required to report on the employee’s payslip the estimated date the contributions were to be sent to the fund effective July 1, 2012, with the reporting requirements changing effective January 1, 2013 to show the actual date the superannuation contributions were sent to the fund.
At this stage, the legislative requirements for reporting superannuation on payslips are “on hold” with the government expected to make further announcements in the future. If you discover that your default fund is not MySuper compliant, you will need to choose a complying default fund and notify your affected employees within 28 days of the change. At this stage, employees who have previously exercised choice of fund or who have a self-managed fund will still have their contributions remitted to their elected fund.
If you have any questions about how the new government might affect your employment and payroll arrangements, please email me at [email protected]